Shares of Nike managed to set a record high despite trade headwinds because the company is in control of its fate, CNBC’s Jim Cramer said Wednesday.
“Thanks to the trade war, we know that, in theory, this should be the worst possible moment to sell iconic American brands into the People’s Republic,” the “Mad Money” host said.
The comments came after the sports apparel company’s stock broke through the $90 mark after delivering top- and bottom-line beats in its fiscal first quarter report. Nike was implicated in tariffs on Chinese goods as it both makes and sells items into the country.
“Last night the company reported and we learned that, rather than being the most vulnerable to the trade war, Nike’s actually the most in control of its own destiny,” Cramer continued. “That’s why the stock rallied $3 and change today.”
While sales in China grew 27% in the quarter, investor worries were soothed by CFO Andrew Campion’s statement that the “impact of tariffs will be most pronounced” in the current quarter, but to expect “continued momentum going forward,” according to an earnings call transcript. CEO Mark Parker added that the company’s sourcing and “other levers” will lead to better gross margins — revenue minus its cost of goods sold — in following quarters.
Nike is the “brand of China for China and the results continue to prove it out,” Parker said, according to the transcript. “We’ve driven double-digit growth in Greater China every quarter for more than five years.”
Cramer credits Nike’s focus on innovative products, a star power brand and best-in-class operations for getting results. The host pointed out the innovative Joyride running shoe and AlphaDunk basketball sneaker releases, double-digit growth in the Jordan brand and 42% growth in digital sales, which allows the company to sell direct to customer.
“At a time when so many companies are wringing their hands and making excuses for all of the obstacles in front of them, look for the winners who seem to thrive on these challenges,” Cramer said. “Companies like Nike, they don’t complain about how the environment’s making it tough for them to deliver. You know what? They just do it.”
Shares of Nike closed Wednesday at $90.69, up more than 22% year-to-date. The company has $142.3 billion in market value.
In broader trading, the Dow Jones Industrial Average tacked on nearly 163 points to reach 26,970.71, the S&P 500 expanded 0.62% and the Nasdaq Composite gained 1.05%
